US, economic data released this week
included January housing starts, which surprised on the upside and PPI
data for the same month, which showed a higher than forecast rise to
4.6% annualised. Meanwhile, the Fed raised the rate at which it charges
banks to borrow from it by 0.25% to 0.75%, denying any suggestion that
the Fed funds rate was being raised any time soon. In a holiday
shortened trading week the Dow and the S&P 500 rose by 3%, whilst the
NASDAQ ended higher by 2.8%.
Euro-Zone advance consumer confidence numbers for February were below
expectations, as was the Zen economic sentiment survey for the same
month. UK CPI for January was 0.2% and at 3.1% year on year, whilst the
December 3 month unemployment rate came in as expected at 7.8%. The FTSE
100 index gained 4.2%, whilst the French CAC and the German DAX ended
higher by 4.7% and 4% respectively, with the Eurostoxx having its best
week since July 2009, buoyed by the like of Barclays, BNP Paribas and VT
Group PLC.
Out East, Japanese department store sales fell by 5.7% year on year in
January but Q409 GDP rose by a higher than forecast 4.6% pace, led by
exports. Elsewhere, India’s inflation rate accelerated to a 15 month
high in January, up by 8.5% annualised. The Nikkei rose by 0.3% whilst
the Hang Seng fell by 1.9%.
The $US index added 0.3% to 80.59, with other gainers including the
Brazilian Real, higher by 2.9% and the $OZ, which gained 1.2%. The
losers included the Yen, which fell by 1.7% and the British Pound, which
gave up 1.5%. German bund yields rose by 9bps this week at 3.28% and UK
10-year yields jumped 13bps to 4.17%, whilst Japanese JGB yields were
little changed at 1.33%. US Treasury 5 and 10 year yields gained 5.5%
and 2.4%, ending the week at 2.46% and 3.78% respectively.
Within the commodities complex the $crude oil price jumped 7.5% to $80 a
barrel, whilst the price of $Gold rose by 2.4%, closing the week at
$1119oz, despite the IMF announcement that it planned to sell 191 tonne
of the yellow metal, just months after the recent 200 T disposal or by
the news that World gold demand fell by 11% in 2009.
Next week sees the latest house price data and Q409 GDP for the US and
for the UK, with the US also due to release January home sales and
durable goods orders plus February consumer confidence numbers. The
latest CPI and consumer confidence figures are due for release for the
Euro-Zone, whilst for Japan it will be the January trade balance and
CPI.
There was scant mention within the newswires this week about US “core”
CPI for January, which FELL for the first time since December 1982.Of
those which did appear, there was a bullish slant stating that “the
recovery was generating little inflation” or “last seen at the beginning
of the long bull market for stocks.” However, if one “joins up the dots”
in respect of this deflationary fact, together with the December 2009
announcement that US bank lending fell by its most on record in a month,
contracting at an annual rate of 16%, then perhaps a different
conclusion should be drawn.
“Trust
yourself. You know more than you think you do.”
